Nicole Company acquires 75% of Carl John Company (CJC) for P6,000,000. The carrying and fair values of CJC's net assets at the time of acquisition are P4,500,000 and P4,900,000, respectively. Required: a. Determine the goodwill or gain on bargain purchase from the above acquisition if the non-controlling interest (NCI) is to be valued on a proportionate basis. b. Determine the goodwill or gain on bargain purchase from the above acquisition if the NCI is to be valued on a fair value basis.

Nicole Company acquires 75% of Carl John Company (CJC) for P6,000,000. The carrying and fair values of CJC's net assets at the time of acquisition are P4,500,000 and P4,900,000, respectively. Required: a. Determine the goodwill or gain on bargain purchase from the above acquisition if the non-controlling interest (NCI) is to be valued on a proportionate basis. b. Determine the goodwill or gain on bargain purchase from the above acquisition if the NCI is to be valued on a fair value basis.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Felix pays $1,000,000 to acquire 80% of Unger, Assume there is no control premium. At the…

A: Value acquires = FVNAA of Unger x 80% = $1,100,000 x 80% = $880,000

Q: Assume that Company A acquires 70 per cent of Company B for a cash price of $14 million when the…

A: Given, Cash price = $14 million

Q: Protrade Corporation acquired 80 percent of the outstanding voting stock of Seacraft Company on…

A: A consolidation worksheet is a spreadsheet that is used to create annual financial reports for a…

Q: Summer Company holds assets with a fair value of $122,000 and a book value of $81,000 and…

A: INTRODUCTION: A liability is a company's responsibility to pay money to other persons or businesses…

Q: Use the following to answer questions 8 through 10: On May 1, 2021, Jazzie Co. agreed to sell the…

A: SOLUTION- WORKING NOTE- GAIN ON ASSET SALE = ($80 MILLION - $ 48 MILLION)…

Q: ABC Company acquired XYZ Company in an acquisition. What date should be used as the acquisition date…

A: Acqusition Acqusition which is describe as the purchase the control of over another companies shares…

Q: Prepare a Translation worksheet.

Q: What is the total amount of goodwill recognized at the date of acquisition?

A: Step 1 : Introduction to Goodwill:Goodwill is an intangible asset created when a company purchases…

Q: e Sylvia Company acquired a 70% interest in The Clarke Company for 1,420,000 when the fair value of…

A: Goodwill: It is the difference between consideration paid and net identifiable assets. in the given…

Q: -Corporation A acquires C-Corporation B in a taxable stock acquisition. In the process of completing…

A: Step 1 As per US GAAP, the costs that facilitate a transaction must be capitalized.

Q: Panda Company purchased an 80% interest of Bear Company on July 1, 2013. The consideration…

A: Answer:- Goodwill means:- Put succinctly, goodwill is an intangible asset that represents the…

Q: In the year ended June 30 2021, Lorelai Ltd, a reporting entity, acquired the assets and assumed the…

A: When a company's ownership is acquired by another company, is is said to be an acquisition. When 2…

Q: Summer Company holds assets with a fair value of $124,000 and a book value of $96,000 and…

A: ConsolidationThe combination of one or two elements is called consolidation. When a company acquires…

Q: On January 1, 2010 Hand acquires 100% of Finger in a statutory merger. At acquisition date the…

A: A merger is the amalgamation of two companies into a single entity by either discontinuing the old…

Q: ompany A acquires 70 per cent of Company B for a cash price of $14 million when the share capital…

A: Consolidated statement of financial position Note: Since you have posted a question with multiple…

Q: Hot Inc. owns 60% of Cold Inc, which it purchased on January 1, 2019 for $540,000. On that date,…

A: Working note: Computation of fair value of identifiable net assets and non-controlling interest of C…

Question

1. Nicole Company acquires 75% of Carl John Company (CJC) for P6,000,000. The carrying and fair values
of CJC's net assets at the time of acquisition are P4,500,000 and P4,900,000, respectively.
Required:
a. Determine the goodwill or gain on bargain purchase from the above acquisition if the non-controlling
interest (NCI) is to be valued on a proportionate basis.
b. Determine the goodwill or gain on bargain purchase from the above acquisition if the NCI is to be valued
on a fair value basis.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Consolidation of accounts

VIEW

Goodwill or Gain on bargain purchase if NCI is to be valued on a proportionate basis

VIEW

Goodwill or Gain on bargain purchase if NCI is to be valued on a fair value basis

VIEW

Step by step

Solved in 3 steps with 4 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Company X acquired 100% of the voting shares of Company Y for $137,500 on 1/1/2022. The fair value of the net assets of Company Y at the date of acquisition was $150,000. This is an example of a(n): Select one: O O FELIC a. revaluation adjustment b. bargain purchase c. extraordinary loss d. positive differential id
Company X acquires 100 percent of the voting shares of Company Y for $275,000 on December 31, 2008. The fair value of the net assets of Company X at the date of acquisition was $300,000. This is an example of a(n): Select one: a. extraordinary loss b. revaluation adjustment c. bargain purchase d. positive differential
ummer Company holds assets with a fair value of $126,000 and a book value of $95,000 and liabilities with a book value and fair value of $24,000. Required: Compute the following amounts if Parade Corporation acquires 70 percent ownership of Summer: What amount did Parade pay for the shares if the fair value of the noncontrolling interest at acquisition is $45,600 and goodwill of $50,000 is reported? What balance will be assigned to the noncontrolling interest in the consolidated balance sheet if Parade pays $87,500 to acquire its ownership and goodwill of $23,000 is reported?
Hoolia Corporation acquires equipment and patents from another company for $50 million and records the acquisition as an asset acquisition. The equipment has a fair value of $19.20 million and the patents have a fair value of $28.80 million. Neither asset is nonqualifying. At what value does Hoolia record the equipment? Select one: a. $25.0 million b. $20.0 million c. $21.2 million d. $19.2 million
On January 1, 2021, Casey Corporation exchanged $3,300,000 cash for 100 percent of the outstanding voting stock of Kennedy Corporation. Casey plans to maintain Kennedy as a wholly owned subsidiary with separate legal status and accounting information systems. At the acquisition date, Casey prepared the following fair-value allocation schedule: Fair value of Kennedy (consideration transferred) $ 3,300,000 Carrying amount acquired 2,600,000 Excess fair value $ 700,000 to buildings (undervalued) $ 382,000 to licensing agreements (overvalued) (108,000 ) 274,000 to goodwill (indefinite life) $ 426,000 Immediately after closing the transaction, Casey and Kennedy prepared the following postacquisition balance sheets from their separate financial records (credit balances in parentheses). Accounts Casey Kennedy Cash $ 457,000 $ 172,500 Accounts receivable 1,655,000…